close

policy

We would like to invite you to continue a survey you have started. ...

Do you trust your insurer ?

Strongly agree
Agree
Disagree
Strongly disagree
Insurance provides peace of mind
Insurance is purchased only when compulsory
Terms and Conditions (small print) are clear and easily accessible
Insurance jargon (language) stands in the way of fully understanding each policy
Insurance companies try their best to uphold the details of the policy without cutting corners
Reducing risk, cutting costs and profits are more important to an insurance company than the customer
Insurance companies in the region are as professional as in other more developed markets
Gender
Age group
Do you feel your insurance provider works in your interest?
Have you had a rejected claim that you feel was not justified?
Do you trust your insurance provider?
Our Network

Register for our free newsletter

 
 
Latest News

Air Arabia vs Jazeera Airways

Air Arabia, Jazeera AirwaysLCCs go sky high

They currently only handle five percent of the region’s internal traffic, not much compared to the 25-30 percent in Asia Pacific, which suggest there’s plenty of room in the region for low cost carriers (LCC).

Figures speak for themselves: pioneering Sharjah-based Air Arabia, which started operating in February 2003, was the first airline in the region created with the sole purpose to venture in the low cost realm, and it did it a lot of good. It began to turn a profit in only its second year of operation and posted a $76.2 million net profit for the first nine months of 2007, up 331 percent compared to the same period the previous year. With over five million passengers to date, Air Arabia was voted the region’s best low-cost carrier at the Aviation Business Awards in Dubai in 2007.

If Air Arabia remains market leader, the impressive growth by Kuwaiti incumbent Jazeera Airways must also be commended. The only private airline in the Middle East (30 percent to Boodai Group and 70 percent of public shares), it launched in 2004 and made $8.7m profit in 2007. This year’s profits are expected to double.

Ignored new fliers

‘Pays less. Fly more’, says Air Arabia tagline. The point is not to take traffic away from traditional carriers, but to create and stimulate an untapped segment of travelers. According to Air Arabia CEO Adel Ali, “price has always been the key factor when a customer books a flight”, and the airline claims to be an average 40 percent cheaper than the average economy fare. The GCC is not all about wealthy and high-end passengers looking for the most luxurious service regardless of the price; the LCCs target everybody else, from the under 25 years old (50 percent of the region’s population) to the business travelers taking short haul trips on a weekly basis.

Besides, on a larger scale, the region also has a huge reservoir of Asian laborers and Western expatriates whose number is increasing due to the region’s booming economies, but who are not traveling as often as they’d like because of financial restraints. Obviously, a $231 (with Air Arabia) or even a $331 (with Jazeera Airways) round-trip from Dubai to Damascus will seem more attractive than the $449 charge with Emirates; similarly, a round trip ticket to Mumbai, India, will cost $258 on Jazeera and $283 with Air Arabia instead of $731 on Qatar Airways.

Regional cities connections

So both companies are rocketing into the future, benefiting from the increasing intra-Middle East traffic and regional tourism growth. Focused on connecting Middle Eastern mid-sized cities, the two carriers are expanding the number, the frequency and the scope of their routes: Air Arabia serves 38 destinations (including Egypt, Turkey, Kazakhstan, Pakistan, India) while Jazeera Airways added more than 20 destinations (such as Iran, Cyprus, Turkey, Lebanon, India, Maldives) to its map in two years to reach 23 sites.

Jazeera Airways expects to become the leading airline for travel in the region, and “the only way to do this is by having multiple hubs in the Peninsula,” says Marwan Boodai, chief executive officer of the company. “The airline will have two major hubs - Kuwait and Dubai - and a ‘baby’ hub in Bahrain with direct flights to Dubai and Kuwait.”

This strategy has also been adopted by Air Arabia that has just inked a management agreement with Morocco’s largest private carrier Regional Air Lines to establish a second hub in Rabat, and also plans to open a new hub in Nepal’s capital Kathmandu through a joint venture agreement with Yeti Airlines, Nepal’s leading carrier.

Affordable quality

The key issue - and tricky part - is to keep on offering the best rates in the market without sacrificing service and safety standards. “What travelers want for their short to medium-haul travel is an airline they can count on to be on time. They want a clean and comfortable cabin and they do not want to be ripped off by airlines, paying big bucks for a short flight,” explains Boodai whose Jazeera calls itself ‘Wings of Freedom’.

For one, internet sales allows LCCs to keep a tight rein on costs; today, over 60 percent of Jazeera’s costumers book online and the carrier’s website attracts almost 5 million hits a month from across the Middle East.

Both companies are also investing exclusively in Airbus’ single cabin aircraft A320, which has the lowest operating costs in its class: Air Arabia Airways bought 35 new A320s, and optioned a further 15, which will triple its current fleet, while Jazeera bought 30 Airbus A320 aircrafts, bringing its orders to 40.

This aircraft has been modeled on the improved interior of super jumbo A380, incorporating wider overhead storage, improvements in the cabin’s design as well as the option of in-flight entertainment. Air Arabia emphasizes its 32 inches seat pitch allowing for more legroom than most economy airlines and Jazeera - that also offers “Jazeera Plus”, a business class equivalent - proudly boasts its signature leather seats. In 2009, it will also be one of the first airlines in the world to enable its passengers to use mobile phones, send emails or access blackberries.

But this kind of services doesn’t come for free. A fee for these communication services has not been announced yet, and passengers must buy cold sandwiches, drinks and even earphones on flight. There’s a downside to cheap tickets.

 
 

Leave a Comment